Investing in Climate Change Policy: An Investors Perspective

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Investing in Climate ChangePolicy An Investors
Perspective
Mark Fulton Global Head of Climate Change
Investment Research DB Climate Change
Advisors Behind the Curve Deploying Capital
to Fight Climate Change http//www.dbcca.com/res
earch
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Climate change universe asset class fit
Listed Equity
Hedge Funds
VC / PE
Infrastructure
Asset Class

• Broad opportunity set for diversification across
  universe
• Diversified large companies where climate change
  is making an impact
• Pure play established companies
• Emerging micro-cap from VC/PE cycle

• Access to all asset classes including progressive
  (i.e. carbon, weather)
• Wide dispersion of returns
• Utilize high volatility for upside and downside
  profit
• Derivatives and other instruments
• Hedging index / commodities where applicable

• Emerging technology cycles
• Capital requirements
• Invest along the value chain e.g.
• Solar
• Biofuels
• Smart grid
• Batteries
• Etc.

• Established sectors with
• Solid cash flows
• Low volatility
• Large capital requirements
• Government supported
• Public transport
• Pipeline, e.g. water and CO2
• Electricity grids

• Attributes
• Relevant Sectors
• Clean Energy
• Environmental Resource Management
• Energy and Material Efficiency
• Environmental Services
• Policy and regulatory support for many sectors

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Commercial Breakeven Electricity Grid Parity
with and without carbon pricing and subsidies for
a specific opportunity
Source DBCCA analysis, 2008.
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Defining the green sweet spot for an
infrastructure stimulus
Source DBCCA Analysis.
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What do investors want from policy?
Investors essentially look for 3 key drivers in
policy In assessing the potential
success of policies, these factors should be
taken into account.
Transparency
Longevity
Certainty and Consistency
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Three broad groups of policy available to climate
change regulators on a geographic level
Source DBCCA analysis, 2008.
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Climate policy country risk assessment
Source Capital investment from New Energy
Finance database, 2009. Data only includes
disclosed data, and may not fully encompass all
deals. The figures listed should be viewed as
"baseline" figures, as there may have been
transactions that NEF has not captured in their
database. Data includes the following (1) The
figures include VC/PE for companies deals, PE -
Buy-out deals, but excludes PE for projects (2)
New build Asset Financing in clean energy (wind,
biofuels, biomass, geothermal, mini-hydro,
marine, solar projects only). The figures
exclude re-financing and project acquisition
deals, bridge/construction type financing, and
small scale projects (3) Includes public market
investment in clean energy. Private Investment in
Public Equity (PIPE), and Over-the-Counter (OTC)
deals are included.
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German legislation boosts renewable energy
investment
Note Investment figures are based on New Energy
Finances PE/VC, Asset Financing and Public
Markets database, which comprises of disclosed
investment amounts. This may not accurately
represent all investments made in the renewable
energy sector during this time period. Market cap
data is sourced from Bloomberg, 2009.
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